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The UK’s goal of getting businesses to increase their investment in research and development is floundering, an annual report reveals.

The report assesses the UK’s progress in meeting the targets outlined in the Government’s ten-year Science and Innovation Investment Framework.

It concludes that midway through the programme, while “overall progress has been good”, there has been “less success” in increasing business investment in research and development (R&D).

“Increasing this remains one of the most difficult challenges of the ten-year framework,” it says.

The report says that while business expenditure on R&D has grown in real terms from £15 billion in 2006 to £16.1 billion in 2007 – the latest year for which figures are available – it remains “relatively static” as a percentage of gross domestic product at 1.1 per cent.

The framework, which runs from 2004 to 2014, aims to increase business R&D spending to 2.5 per cent of GDP by 2014.

In other areas, however, the report says the UK is doing well.

Although China has now overtaken it to become the second-largest producer of research papers, the UK remains the most productive in comparison with what it invests and is second only to the US in terms of citations and highly cited papers.

The report concludes that knowledge transfer and commercialisation activities are now firmly established across the university sector and within the research councils, and says the number of spin-offs remains well in advance of the figure in the early 1990s.

The release of the report comes after Adrian Smith, director-general for science and innovation at the Department for Business, Innovation and Skills, told Times Higher Education that scientists had “undersold” rather than oversold the promise of their research.

Speaking last week at an event at City University London, where he reviewed the achievements since the framework was introduced, he said that, if he had a complaint, it was that scientists and researchers had not done enough to “sell” to the public the impact of their research on society and the economy.

“The stories of benefits and the linkage to impact of all kinds are incredible. But people did the research, got on with it, lived their lives and did not capture it,” he said.